The Key Components For Successful Contract Management
The cost of improper contract management far outweighs the cost of doing it right.
Regardless of the size of the enterprise or the industry it is in, all organisations will at some point in time use contracts, all of which need to be planned, awarded and managed.
Increasingly, more companies are focusing on what they do best and buying-in goods and services that can be provided by outside sources quicker, at lower cost and better quality. However, the methods used to acquire goods and services at the best price and under the best terms need to follow a structured process with careful planning and management. This will require investment from the company — and it is not just financial considerations. The cost of not doing it can far outweigh the cost of doing it right. This paper identifies some of the aspects to consider and best practices to adopt to make contract management an integral part of any business process.
One of the most obvious reasons why contract management is important is that in the EU it is a legal requirement that you must use a formal and open tendering process for all public sector contracts that exceed certain thresholds, which can be as low as €80,000. Even as private companies are not obliged to comply with the EU contracting process (known as the “OJEU process” from the Official Journal of the European Union) it is nevertheless a good process with many best practices that should be adopted and implemented within organisations.